Weekly Economic Review

Weekly Economic Regime Report
As of: 2026-05-31

1/8 Economic Strategist Summary
Economic Regime: Disinflationary Expansion
Confidence: High (100% input availability)
Growth remains constructive while inflation pressure is easing, a favorable macro mix.

2/8 What Changed Since Prior Economic Run
- Prior economic run: insufficient history. This section will become more useful after several weekly observations.

Historical context:
Economic history has fewer than two observations. Trend context will build over time.

3/8 Economic Regime Dashboard
Growth: 76/100 - Expanding
Labor: 60/100 - Stable
Inflation Pressure: 49/100 - Benign / Watch
Credit: 88/100 - Loose
Liquidity: 67/100 - Neutral

3B/8 Economic Transition Monitor
- Current economic regime: Disinflationary Expansion.
- Insufficient history for transition analysis.

3C/8 Economic Momentum + Deterioration Monitor
Economic momentum:
- Insufficient history for 4-week economic momentum analysis.

Deterioration monitor:
- Insufficient history for persistent 3-run deterioration or improvement signals.

3D/8 Market / Economy Divergence Monitor
- Market regime: Unavailable.
- Economic regime: Disinflationary Expansion.
- Current alignment read: unavailable.
- Market / economy divergence risk: Low.
- Reason: market and economic regimes are not showing a major contradiction based on current pillar scores.

3E/8 Economic Data Freshness Monitor
- Overall data freshness: Recent (71/100).
- Monthly official macro data often lag by one to two months; weekly claims, credit spreads, financial conditions, and Fed balance-sheet data provide the faster confirmation layer.
- Lagged official-data inputs: Manufacturing Industrial Production YoY, Manufacturers New Orders YoY, Retail Sales YoY, Retail Sales 3M Annualized, Industrial Production YoY, Nonfarm Payrolls 3M Avg Change, Unemployment Rate, Unemployment Rate 3M Change, ...
- Current/faster confirmation inputs: Initial Claims 4W Avg, Initial Claims 13W Change, High Yield OAS, High Yield OAS 13W Change, Investment Grade OAS, Investment Grade OAS 13W Change, Chicago Fed NFCI, NFCI 13W Change, ...
- Interpretation note: data freshness is adequate, with faster indicators helping confirm or challenge the slower official macro data.

Pillar freshness:
- Growth: Lagged (avg age 66d; freshest Manufacturing Industrial Production YoY as of 2026-04-01; oldest Manufacturers New Orders YoY as of 2026-03-01).
- Labor: Recent (avg age 43d; freshest Initial Claims 4W Avg as of 2026-05-23; oldest Nonfarm Payrolls 3M Avg Change as of 2026-04-01).
- Inflation Pressure: Lagged (avg age 60d; freshest CPI YoY as of 2026-04-01; oldest CPI YoY as of 2026-04-01).
- Credit: Current (avg age 5d; freshest High Yield OAS as of 2026-05-28; oldest Chicago Fed NFCI as of 2026-05-22).
- Liquidity: Recent (avg age 26d; freshest Reverse Repo 13W Change as of 2026-05-29; oldest M2 Money Supply YoY as of 2026-04-01).

4/8 Growth / Labor / Inflation / Credit / Liquidity Pillars
Growth: 76/100 - Expanding
  Growth is broadly supportive of risk assets.
  - Manufacturing Industrial Production YoY: 1.38% | component score 62
  - Manufacturers New Orders YoY: 2.11% | component score 55
  - Retail Sales YoY: 4.87% | component score 98
  - Retail Sales 3M Annualized: 12.88% | component score 100
  - Industrial Production YoY: 1.35% | component score 62

Labor: 60/100 - Stable
  Labor is balanced, with no clear stress signal.
  - Nonfarm Payrolls 3M Avg Change: 48k | component score 33
  - Unemployment Rate: 4.30% | component score 73
  - Unemployment Rate 3M Change: 0.00 ppt | component score 67
  - Initial Claims 4W Avg: 209,000 | component score 76
  - Initial Claims 13W Change: 1.90% | component score 52

Inflation Pressure: 49/100 - Benign / Watch
  Inflation pressure is moderate but should be watched for direction of travel.
  - CPI YoY: 3.95% | component score 49
  - Core CPI YoY: 2.99% | component score 28
  - PPI YoY: 5.99% | component score 100
  - Average Hourly Earnings YoY: 3.57% | component score 19

Credit: 88/100 - Loose
  Credit conditions are supportive and not signaling broad stress.
  - High Yield OAS: 2.72% | component score 100
  - High Yield OAS 13W Change: -0.38 ppt | component score 92
  - Investment Grade OAS: 0.73% | component score 100
  - Investment Grade OAS 13W Change: -0.12 ppt | component score 83
  - Chicago Fed NFCI: -0.51 | component score 93
  - NFCI 13W Change: 0.02 | component score 57

Liquidity: 67/100 - Neutral
  Liquidity is not clearly supportive or restrictive.
  - Fed Balance Sheet 13W Change: 1.37% | component score 80
  - M2 Money Supply YoY: 4.72% | component score 86
  - Reverse Repo 13W Change: -4.6 | component score 51
  - Treasury General Account 13W Change: -57,316.0 | component score 60
  - Effective Fed Funds Rate: 3.64% | component score 59

5/8 Market Regime vs Economic Regime Alignment
Market Regime: Narrow Growth-Led Risk-On. Economic Regime: Disinflationary Expansion. Market structure and macro conditions are broadly aligned.

6/8 Historical Economic Context
History file: /app/data/history/economic_regime_history.csv
Current history observations: 1
Economic history has fewer than two observations. Trend context will build over time.

7/8 Advisor-Facing Read-Through
Advisor conversation: the economy appears constructive with less inflation pressure, a backdrop that can support quality growth and broader participation if market internals confirm.

Key Economic Inputs
- Manufacturing Industrial Production YoY: 1.38% as of 2026-04-01
- Manufacturers New Orders YoY: 2.11% as of 2026-03-01
- Retail Sales YoY: 4.87% as of 2026-04-01
- Industrial Production YoY: 1.35% as of 2026-04-01
- Nonfarm Payrolls 3M Avg Change: 48k as of 2026-04-01
- Unemployment Rate: 4.30% as of 2026-04-01
- Initial Claims 4W Avg: 209,000 as of 2026-05-23
- CPI YoY: 3.95% as of 2026-04-01
- Core CPI YoY: 2.99% as of 2026-04-01
- High Yield OAS: 2.72% as of 2026-05-28
- Investment Grade OAS: 0.73% as of 2026-05-28
- Chicago Fed NFCI: -0.51 as of 2026-05-22
- Fed Balance Sheet 13W Change: 1.37% as of 2026-05-27
- M2 Money Supply YoY: 4.72% as of 2026-04-01
- Effective Fed Funds Rate: 3.64% as of 2026-04-01

Charts
- /app/data/charts/economic_regime_pillars.png

8/8 OpenRouter Economic Strategist Read-Through
#### 1. Executive Read-Through
- The economy is currently in a **Disinflationary Expansion** regime, indicating moderate growth with decreasing inflation pressures.
- Growth metrics show a strong score of **75.5**, signaling robust economic activity.
- Labor metrics reflect stability with a score of **60.2**, although initial claims suggest some caution.
- Credit conditions are favorable, scoring **87.5**, indicating healthy lending environments.
- Liquidity remains supportive at **67.0**, which is conducive to investment flows.

#### 2. Economic Regime Interpretation
The **Disinflationary Expansion** regime suggests that while the economy is growing, inflationary pressures are easing. This environment typically supports consumer spending and business investment, as lower inflation can lead to increased purchasing power. However, the balance between growth and inflation must be monitored closely, as shifts in either direction could impact market sentiment.

#### 3. Pillar Assessment
- **Growth (75.5)**: Strong indicators of economic activity, with retail sales and industrial production showing positive year-over-year growth. This suggests consumer confidence and business investment are robust.
- **Labor (60.2)**: The unemployment rate is stable at **4.3%**, and wage growth is at **3.57%** year-over-year. However, initial claims have increased slightly, indicating potential caution in the labor market.
- **Inflation Pressure (48.9)**: Core CPI at **2.99%** and overall CPI at **3.95%** indicate inflation is moderating, which could ease pressure on consumers and businesses.
- **Credit (87.5)**: Credit conditions are very favorable, with low spreads in high-yield and investment-grade bonds, suggesting strong investor confidence and lending activity.
- **Liquidity (67.0)**: Sufficient liquidity in the market supports ongoing investment, although recent changes in the Fed balance sheet should be monitored for future implications.

#### 4. Market Regime Alignment
The current economic regime of **Disinflationary Expansion** generally aligns with a favorable market environment. The combination of strong growth and easing inflation supports risk assets, as investors may feel more confident in economic stability. However, if inflation begins to rise unexpectedly or if labor market indicators worsen, this could challenge the current market sentiment.

#### 5. ETF and Advisor Conversation Themes
- Discuss the implications of a **Disinflationary Expansion** on consumer behavior and spending patterns.
- Explore how favorable credit conditions can influence corporate earnings and investment strategies.
- Address the potential impact of labor market trends on consumer confidence and economic growth.
- Consider the role of liquidity in supporting market dynamics and investment flows.

#### 6. Risks and Caveats
- Economic data is often lagged and subject to revisions, which can alter the interpretation of current trends.
- Inflation risks remain, particularly if supply chain issues or geopolitical tensions arise.
- Credit risks should be monitored, especially if economic growth slows or if defaults increase.
- Labor data can lag behind economic turning points, requiring careful observation of trends in claims and wage growth.

#### 7. Advisor Conversation Starters
- How do you perceive the current economic growth trends impacting your clients’ investment strategies?
- What are your thoughts on the implications of easing inflation for consumer spending?
- How are you adjusting your approach to credit exposure in light of current market conditions?
- What indicators do you find most useful in assessing labor market health for your clients?